European Stocks Rise as Companies Beat Earnings Forecasts
Xstrata Plc (XTA) climbed 1.6 percent and Danske Bank A/S (DANSKE) added 6.7 percent after they reported earnings that beat estimates. Standard Chartered tumbled the most in almost 24 years after a U.S. regulator said the lender faces suspension of business activities because of transactions with Iranian banks. Nestle fell 1 percent.
The Stoxx Europe 600 Index rose 0.8 percent to 268.80 at the close of trading. The gauge extended a four-month high yesterday, as Greece and its creditors agreed to strengthen efforts to meet bailout conditions and support economic growth. The measure has climbed 14 percent since June 1 as policy makers eased repayment terms for Spanish banks and optimism grew that central banks will announce stimulus measures.
“Expectations for European (SXXP) equities did get low,” Ben Lofthouse, a fund manager at Henderson Global Investors in London, said in a Bloomberg television interview. “We’ve seen a defensive rally. These companies are doing well. Their results are proving that they are doing OK.”
National benchmark indexes rose in 14 of the 18 western European markets. France’s CAC 40 Index rallied 1.5 percent. Germany’s DAX added 0.7 percent and the U.K.’s FTSE 100 increased 0.6 percent.
German factory orders declined more than twice as much as economists forecast in June as sales to euro-area countries slumped.
Orders, adjusted for seasonal swings and inflation, dropped 1.7 percent from May, when they rose 0.7 percent, the Economy Ministry in Berlin said today. Economists forecast a 0.8 percent decline, according to the median of 35 estimates in a Bloomberg News survey. From a year earlier, orders fell 7.8 percent when adjusted for work days.
Italy’s economy contracted for a fourth straight quarter in the three months through June amid an intensifying euro-area debt crisis.
Gross domestic product declined 0.7 percent in the second quarter, Rome-based national statistics institute Istat said in a preliminary report today. The contraction was less than the median forecast for a 0.8 percent decline in a survey of 22 economists by Bloomberg News. GDP fell 2.5 percent from a year earlier.
U.K. retail sales rose in July as the start of the Olympics at the end of the month helped to boost food and drink sales, the British Retail Consortium said.
Xstrata, target of a $27 billion takeover bid by Glencore International Plc, added 1.6 percent to 896.9 pence. The mining company reported first-half net income of $1.94 billion, beating the average estimate of $1.49 billion in a survey of analysts.
Danske Bank rallied 6.7 percent to 96.05 kroner. The lender said second-quarter profit surged 27 percent to 1.5 billion kroner ($250 million), exceeding estimates in a Bloomberg survey by the most since the first quarter of 2010, after Denmark’s largest lender booked higher income and cut its costs.
InterContinental Hotels Group Plc (IHG) increased 6.4 percent to 1,725 pence, its highest price since 2003. The world’s largest provider of hotel rooms reported a 6 percent gain in first-half profit and said it will return $1 billion to shareholders through a special dividend and share buyback.
A gauge of basic resources shares advanced 2.3 percent for the second-biggest gain among the 19 industry groups in the Stoxx 600 as steelmakers advanced.
Voestalpine AG (VOE), Austria’s biggest steelmaker, rallied 6.6 percent to 23.35 euros after saying full-year profit will almost match last year’s result, even after first-quarter earnings slumped. Kloeckner & Co SE (KCO) climbed 8.5 percent to 7.49 euros. Evraz Plc (EVR) rallied 10 percent to 276.9 pence.
Standard Chartered (STAN) plummeted 16 percent to 1,228.5 pence, its biggest decline since Sept. 1988. The lender may face costs of as much as $5.5 billion after it was accused of violating U.S. money laundering laws relating to its dealings with Iranian banks, according to Cormac Leech, an analyst at Liberum Capital Ltd.
The bank conducted $250 billion of transactions with Iranian banks over seven years in violation of federal money laundering laws, a New York regulator said in an order warning that the firm’s U.S. unit may be suspended from doing business in the state.
Nestle, the world’s biggest food company, dropped 1 percent to 59.70 euros.
Lanxess AG (LXS) slid 1.4 percent to 60.01 euros. The chemicals company reported second-quarter earnings excluding extraordinary items that beat analyst estimates and reaffirmed its 2012 forecast. The reiteration of its earlier guidance may disappoint investors, according to Kepler Capital Markets.
Elan Corp. (ELN) sank 8.7 percent to 8.43 euros, paring losses of as much as 14 percent, after the company’s partners ended most plans to develop an Alzheimer’s drug following a second failure in a clinical trial. Elan will take a charge of $117.3 million this quarter, writing down to zero the value of its venture with Johnson & Johnson to develop the drug, bapineuzumab, the Dublin- based company said.
Royal DSM NV (DSM), the world’s largest maker of vitamins, fell 3.8 percent to 39.64 euros. The company said it plans to save 150 million euros ($186 million) through further cost reductions by 2014 and plans to cut about 1,000 jobs. DSM reported second- quarter earnings that were in-line with analyst estimates.
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